In Defense of Dynamic Ticket Pricing

You might recall that the San Francisco Giants have begun using a system that allows them to alter the prices of their tickets to help increase ticket sales (see here and here), much the way that airlines price their tickets.  They use a system that allows them to alter the price of their tickets to account for changes in weather, etc.

Christian Hassold has a nice defense of such a system.

Dynamic ticket pricing is needed now and it could benefit the market in two ways. First, it would reduce the number of tickets resold on the secondary market because dynamic pricing would reduce profit potential at resale. Second, dynamic pricing could increase ticket sales volume for events where interest was low. It seems plausible that some concerts are under attended because lower quality ticket prices (with fee’s) are not enticing enough. This is probably why Live Nation is putting so much effort into selling lawn seats for $25 with no ticketing fees – that kind of price entices people to buy.

Comments

[EclectEcon]

So what's wrong with secondary markets?? Is it obviously a "good thing" to reduce the number of tickets sold in the secondary market? If secondary markets are not illegal, the transaction costs can be quite low; and they definitely promote economic efficiency.

[Phil]

There's nothing wrong with the secondary markets per-se and I don't think he's saying that they are bad. He's arguing that event holders aren't setting their ticket prices as well as they could and are thus leaving money on the table for others.